U.S. rice groups protest Mexico's announced duty

U.S. rice producer organizations are reacting angrily to Mexico's announcement of its decision to impose increased duties on imports of long-grain milled rice from the United States.

The announcement came after the International Commercial Practices Unit of Mexico's Secretariat of the Economy concluded that damage was done to the Mexican rice industry by low-priced shipments of long-grain milled rice from the United States. Import duties of up to 10.18 percent will be assessed.

The ruling came in an anti-dumping suit filed more than 18 months ago by the Mexican Rice Council.

“Given the unprecedented difficulties facing rice producers and rice millers, we strongly urge that Secretary (Ann) Veneman and U.S. Trade Representative Robert B.) Zoellick immediately muster the Rapid Response Team of the new Consultative Committee on Agriculture to resolve this issue in a manner which does not discriminate against any form of rice or any shipper of rice to Mexico,” said Nolen Canon, chairman of the U.S. Rice Producers Association.

USA Rice has contacted Bush administration officials to register “deep disappointment,” and has urged U.S. officials to counter Mexico's “politically motivated action that threatens to circumvent the NAFTA,” said a spokesman for the USA Rice Federation.

The spokesman said the 18-month investigation by the Mexican government cost the federation and its members more than $500,000 in legal fees.

Canon noted that the Consultative Committee announced by Agriculture Secretary Veneman and the Government of Mexico in April was established to address agriculture trade disputes quickly, before they become problems. “This will be a good test of the new committee's ability to deal with market access issues,” he said.

Mexico has become the largest single export market for U.S. rice in recent years. While the great majority of shipments continue to be rough (paddy) rice, the scheduled elimination of all import duties under NAFTA on Jan. 1, 2003, levels the playing field for all forms of rice to compete for this growing market, according to Canon, a rice producer from Tunica, Miss.

If the new consultative committee process doesn't work, “USRPA urges that all available forms of protest be utilized to overturn this generally incomprehensible decision,” said Canon.

According to the announcement, the increased duties were to take effect immediately. While there are procedures in Mexican law for annual reviews for specific supplies facing anti-dumping duties, the overall measure is in effect for five years, according to USA Rice officials.

Anti-dumping duties are designed to offset selling of a product in a foreign market for less than the price charged in the domestic market.

Three USA Rice members underwent an extensive and grueling investigation by Mexican auditors to determine the extent of alleged dumping, the federation said. Two of the firms came up with a dumping rate of zero while the third had a rate of less than 4 percent.

It said that when Mexico issued its preliminary decision on the anti-dumping investigation last summer, it did not find any evidence of injury by imports from the United States, and no anti-dumping duties were imposed.

“Now, less than a year later, the tables are completely turned,” the announcement said. “The only conclusion to draw is that this latest decision was a political one.”

USA Rice officials say that although U.S. long-grain milled rice exports comprise 1.5 percent of Mexico's total rice consumption, analysts believe the size of U.S. long-grain shipments were poised to grow significantly.

Under the terms of the North American Free Trade Agreement, duties on all U.S. rice imported by Mexico were to go to zero percent in 2003. “At this point, on Jan. 1, 2003, U.S. rough rice will face zero duties while the anti-dumping rates will be in place for long-grain milled rice,” an official said.